Economy

BENGALURU (Reuters) – Global growth is set to stay resilient this year and only pick up pace a bit in 2025, according to a Reuters poll of economists, a stable outlook at odds with still-relatively aggressive interest rate cut bets in financial markets.Growth among leading economies is not forecast to be consistent, with relative strength in the United States and India, and sluggishness expected from the euro zone, as well as No. 2 economy China.Economists more broadly are optimistic, however, there will not be a resurgence in inflation now most central banks have got price pressures down close to where they want them.The Jan. 3-25 Reuters polls covering 48 economies showed economists forecasting global growth at an average 2.6% in 2024: not boom times, but not recession either.This year’s view is only slightly weaker than an expected 3.0% rate for 2023 despite a rapid series of central bank rate hikes. This time last year, these same economists were too pessimistic, expecting just 2.1% growth.Global growth is forecast to accelerate to around 3.0% next year and also in 2026. And with a still-tight labour market across most of the developed world, resilient consumer and government spending, risks to growth were mostly to the upside.”If you look at the economic outlook for 2024, it’s easy to say reasons why it could be bad. But there’s no evidence of that in the data yet. There are plenty of reasons in the data already to suggest why it could be better than expectations…a similar story to 2023,” said James Pomeroy, global economist at HSBC.That may come as a disappointment to those in financial markets gunning for aggressive rate cuts.RATE CUTS FORECAST FROM MID-YEARTraders started to price in a first Federal Reserve interest rate cut in March after Chair Jerome Powell surprised markets and analysts at the December policy meeting by saying a discussion of cuts was coming “into view”.However, economists in Reuters polls since September 2023 have consistently predicted the first Fed rate cut will come around the middle of this year.Markets are already swinging back in that direction, with fed funds futures on Thursday implying around a 47% probability of a March Fed rate cut, down sharply from about 90% a month ago.So while interest rate reductions are coming, if economists’ forecasts are right, there won’t be so many.”I think the mistake the markets are making kind of broadly in the pricing is they’re pairing a forecast for rates that would, that could, prevail if we’re seeing a sharp slowing in the economy,” said Nathan Sheets, global chief economist at Citi, who expects a mild slowdown this year.”I don’t think the full force of the monetary policy tightening has been felt yet.”The rate cut trajectory was largely dependent on how quickly central banks will bring inflation down to their targets.A strong 77% majority of economists, 213 of 277, who answered a separate question said the risk of a significant resurgence in inflation over the coming six months was low (194) or very low (19). The remaining 64 said high or very high.While inflation has fallen sharply from over 10.0% in some countries to low single digits in the past year, the last leg down to target may not be a smooth ride simply because there is much more scope for small upside disappointments. “It did come down fairly dramatically, but it’s still above target in most major economies…(and) the reality is that underlying inflation is still sticky,” said Douglas Porter, chief economist at BMO Capital Markets.(For other stories from the Reuters global economic poll:) More

(Reuters) -Levi Strauss & Co forecast annual sales and profit below Wall Street expectations on Thursday, and said it would cut 10% to 15% of global corporate jobs as the denim maker seeks to rein in costs amid weakness in its wholesale business. Levi attributed the weak forecast to plans to exit its Denizen brand and cut back on off-price sales, as well as weaker foreign currency exchange rates and the final liquidation of its Russia business. The company also missed fourth-quarter revenue estimates.The fallout of an inventory glut last year and consumers feeling the pinch from inflation are a drag on the company’s wholesale channel and outweighing the gains in its direct-to-consumer (DTC) business. Levi’s (NYSE:LEVI) incoming CEO, Michelle Gass, said the company’s U.S. wholesale business improved over its last quarter and is expected to show growth in the second half of 2024. However, unpredictable consumer demand meant Levi’s would continue to be conservative in its outlook, she told investors in a post-earnings conference call.”We’re encouraged, but as it relates to that channel, we’re not declaring victory yet,” Gass said. “There’s been a lot of volatility this past year … so we are taking a cautious approach as we look forward.” Phasing out the Denizen brand, which is more inexpensive than other Levi products and sells at a lower margin, would allow the company to focus more on expanded product categories, including lighter-weight denim and athletic wear, according to Chief Financial and Growth Officer Harmit Singh. “They want to make (Levi’s) more upscale,” said Rachel Wolff, an analyst at Insider Intelligence. “It’s a strategic decision as they try to move up-market and appeal to a more premium consumer.” Singh also told investors that Levi’s is experiencing delays of 10 to 14 days in transit times as a result of continued disruptions to Red Sea shipping. The company has shifted some U.S. shipments to the West Coast, a route that avoids the Red Sea and Suez Canal.Shares of the company were down 1.7% in after-hours trading on Thursday. Sales in Levi’s total wholesale business, which accounted for about 62% of its net revenue in 2022, dipped 3% on a constant-currency basis in the quarter ended Nov. 26. The layoffs are set to occur in the first half of 2024, and, coupled with more DTC-focused initiatives, would generate net cost savings of $100 million in 2024. The company will take a $110 million to $120 million charge related to the job cuts in the current quarter.”We’re in a soft demand environment and I think that’s reflected in the cost-cutting announcement,” said Mari Shor, a senior equity analyst at Columbia Threadneedle Investments. “It’s a signal they don’t feel great about the topline and are looking for other ways to cut expenses.”Levi has about 20,000 workers globally, with roughly 5,000 corporate employees.The company projected fiscal 2024 net revenue growth of 1% to 3%, compared with analysts’ estimate for a 4.7% increase to $6.49 billion, according to LSEG data. Levi’s expects adjusted per-share profit of $1.15 to $1.25, lower than estimates of $1.33. More

The Federal Aviation Administration’s decision to limit Boeing’s production of 737 Max planes could hurt airlines that are struggling to buy enough new aircraft.Boeing hoped 2024 would be the year it would significantly increase production of its popular Max jets. But less than a month into the year, the company is struggling to reassure airline customers that it will still be able to deliver on its promises.That’s because the Federal Aviation Administration said on Wednesday that it would limit the plane maker’s output until it was confident in Boeing’s quality control practices. On Jan. 5, a panel blew off a Boeing 737 Max 9 body shortly after takeoff, terrifying passengers on an Alaska Airlines flight and forcing the pilots to make an emergency landing at Portland International Airport in Oregon. Almost immediately, the F.A.A. grounded some Max 9s.Since then, details have emerged about the jet’s production at Boeing’s facility in Renton, Wash., that have intensified scrutiny of the company’s quality control. Boeing workers opened and then reinstalled the panel about a month before the plane was delivered to Alaska Airlines.The directive is another setback for Boeing, which had been planning to increase production of its Max plane series to more than 500 this year, from about 400 last year. It also planned to add another assembly line at a factory in Everett, Wash., a major Boeing production hub north of Seattle.As part of the F.A.A.’s announcement on Wednesday, it also approved inspection and maintenance procedures for the Max 9. Airlines can return the jets to service once they have followed those instructions. United Airlines said on Thursday that it could resume flying some of those planes as soon as Friday.The move is another potential blow to airlines. Even though demand for flights came roaring back after pandemic lockdowns and travel restrictions eased, the airlines have not been able to take full advantage of that demand. The companies have not been able to buy enough planes or hire enough pilots, flight attendants and other workers they need to operate flights. A surge in the cost of jet fuel after Russia invaded Ukraine also hurt profits.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

TOKYO (Reuters) – Core inflation in Japan’s capital slowed below the central bank’s 2% target to hit the lowest level in nearly two years, data showed on Friday, underscoring policymakers’ view that cost-push pressures will continue to ease in coming months.The focus shifts to whether wages will rise enough to underpin consumption and help Japan sustainably achieve the Bank of Japan’s 2% inflation, which it describes as a prerequisite for phasing out its massive monetary stimulus, analysts say.The core consumer price index (CPI) in Tokyo, a leading indicator of nationwide inflation trends, rose 1.6% in January from a year earlier, government data showed, slower than a median market forecast for a 1.9% gain. The Tokyo core inflation, which excludes volatile fresh food but includes fuel costs, slowed for the third straight month to the lowest level since March 2022, due mostly to falling energy prices. It followed a 2.1% rise in December. The so-called “core core” index that strips away both fresh food and fuel prices – closely watched by the BOJ as a gauge of broader price trends – rose 3.1% in January after increasing 3.5% in December, the data also showed. With inflation having exceeded the BOJ’s 2% inflation target for more than a year, many market players expect the bank to end negative interest rates this year with a growing number of them betting on this to happen in March or April.The BOJ has pledged to keep ultra-loose policy until the recent cost-push inflation is replaced by price rises driven by robust domestic demand, accompanied by higher wages.The central bank maintained its ultra-easy monetary settings on Tuesday but signalled its growing conviction that conditions for phasing out its huge stimulus were falling into place, suggesting that an end to negative rates was nearing. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK consumer confidence reached a two-year high in January, according to research company GfK, in the latest positive sign for the economy.The consumer confidence index, which measures people’s views of their finances as well as their view on broader economic prospects, rose three points month on month to minus 19, the highest level since January 2022.This was the third consecutive month-on-month increase and followed the release of January’s purchasing manager index last week, which showed economic activity rising at the fastest pace in seven months.Economists said the findings suggested that January’s cut in national insurance, falling mortgage rates and rising real wages were helping consumer sentiment despite the cost of living crisis still hurting household budgets.“What really stands out is consumer expectations of personal finance for the next 12 months, which is positive for the first time in two years,” said Joe Staton, client strategy director at GfK. “That shows that things are heading in the right direction and that people are more likely to spend.”The rise in consumer confidence in the UK compares with a larger-than-expected drop in the eurozone, according to data released earlier in the week. But an improvement in consumer sentiment does not always feed through to the economy. December retail sales in the UK fell at a surprisingly fast rate, despite GfK’s confidence index ticking upwards.“Economic momentum in the UK is clearly improving,” said Tomasz Wieladek, an economist at T Rowe Price. “However, the headwinds to consumer confidence could become more powerful in the future, especially if supply chain restrictions become greater and inflation stickier.”GfK’s consumer confidence index remains negative, which means that the majority of respondents were gloomy about the economy, and is still below the long-term average of minus 17.There was a slight, unexpected uptick in inflation in December from 3.9 per cent to 4 per cent the previous month. The impact on supply chains from the attacks on shipping in the Red Sea has stoked fears of more persistent price pressures. The Bank of England is expected to hold interest rates at a 15-year high of 5.25 per cent at its next rate-setting meeting on February 1, with investors betting the benchmark rate will fall to 4.25 per cent by the end of the year with the first cut in June. Expectations of lower borrowing costs have helped a reduction in fixed mortgage rates over the past few months. More

Businesses are doubling down on AI development and majority of that traffic is expected to be managed on the cloud infrastructure from Amazon (NASDAQ:AMZN) Web Services (AWS), Google (NASDAQ:GOOGL) Cloud and Microsoft (NASDAQ:MSFT)’s Azure — the top three vendors globally.AWS’ Mississippi expansion plan comes days after it announced a more than $15 billion investment in Japan, and Google’s move to set up a data center just outside of London for $1 billion.In coordination with the Madison County Economic Development Authority (MCEDA), AWS will establish multiple data center units in two Madison County industrial parks, which is projected to create at least 1,000 new jobs in the state, Amazon said in a blog.Amazon said it has invested $2.3 billion in the state since 2010 to build its infrastructure including five fulfillment and sortation centers. More

The president made the trip to promote a $1 billion infrastructure project, contrasting his performance with the chaotic “Infrastructure Week” plans of former President Donald J. Trump.Consumer confidence is up. Fears of a recession are abating. The economy is growing. And a corroded bridge in Wisconsin is receiving more funding.It is a wintry mix of positive news for President Biden, who traveled to the shores of a bay near Lake Superior on Thursday to stand at the foot of the Blatnik Bridge, a structure that his administration said would have failed by 2030 without a $1 billion infusion provided by the bipartisan infrastructure law that Mr. Biden championed.The president was there to talk infrastructure and the economy, and to contrast his performance with that of his predecessor and likely challenger in the general election , former President Donald J. Trump.“The economic growth is stronger than we had during the Trump administration,” Mr. Biden, dressed in a casual pullover sweater, said as he addressed Wisconsinites assembled at Earth Rider Brewery in Superior, Wis. “We obviously have more work to do, but we’re making real progress.”As the president spoke, Mr. Trump was taking the stand in a defamation trial in New York, offering a striking split-screen comparison that the Biden campaign has welcomed.Mr. Biden and his advisers believe projects like the Blatnik, taking place in the backyards of Americans living in battleground states like Wisconsin, could be enough to bolster optimism and overcome pervasive skepticism about the state of the economy.In his event, Mr. Biden talked about the $6.1 billion that had been invested in Wisconsin and the $5.7 billion in Minnesota, located just over the bridge, which supports agriculture, shipping and forestry industries in the upper Midwest. The Blatnik, which spans the St. Louis Bay and connects the ports of Superior and Duluth, Minn., had corroded and been clogged with construction and detours.“For decades people talked about replacing this bridge, but it never got done,” Mr. Biden said. “Until today.”Bipartisan law or not, no Republican lawmakers assembled to greet Mr. Biden. (“I’m sorry to say the vast majority voted against it,” Mr. Biden said, a number that includes Rep. Tom Tiffany, a Republican representing the district where the bridge is located.)“The economic growth is stronger than we had during the Trump administration,” Mr. Biden said.Michael A. McCoy for The New York TimesThe Democratic governors of both Wisconsin and Minnesota showed up. “This would not have happened without Biden,” Gov. Tony Evers of Wisconsin told attendees.Several other Democrats, including Senator Tina Smith of Minnesota and Senator Tammy Baldwin of Wisconsin, accompanied the president as he observed the bridge and, later, met with people at a taproom next to the brewery. Senator Amy Klobuchar of Minnesota sipped a glass of beer as she mingled next to Mr. Biden.Even without no-show Republicans, who are quickly closing ranks around Mr. Trump, there are other headwinds to overcome.Mr. Biden has faced low approval ratings on the economy. And he has been criticized by other Democrats over whether it was smart of him to adopt Bidenomics as a namesake effort to take credit for an economy that Americans have repeatedly signaled they don’t feel excited about.On Thursday, Mr. Biden did not seem to be feeling any qualms. In the brewery, he stood in front of a pole that had letters spelling “Bidenomics,” and assailed Mr. Trump for “hollowed-out communities, closing down factories, leaving Americans behind.”For his part, Mr. Trump has attacked Mr. Biden on just about everything, but has also falsely claimed that low employment numbers under the Biden administration are not real.Elsewhere in the Midwest, Treasury Secretary Janet Yellen took rare aim at Mr. Trump during a speech in Chicago.“Our country’s infrastructure has been deteriorating for decades,” Ms. Yellen said on Thursday. “In the Trump administration, the idea of doing anything to fix it was a punchline.”There was truth to her comment. During Mr. Trump’s presidency, he would often veer away from infrastructure-related speeches to attack his enemies. In his first Infrastructure Week-themed event in 2017, he accused James B. Comey, whom he had fired as F.B.I. director, of committing perjury and of leaking to the news media. He later proposed a $2 trillion infrastructure package without specifics on how he’d get the money. The phrase “Infrastructure Week” became a running joke in Washington.In November 2021, Mr. Biden signed a $1.2 trillion infrastructure bill into law.“Instead of infrastructure week, America is having an infrastructure decade,” Mr. Biden said on Thursday, referring to the work his administration has done.In a show of how significant Wisconsin will be ahead of the election in November, Mr. Biden traveled there just three days after Vice President Kamala Harris began a nationwide tour for reproductive rights in an event outside Milwaukee. Wisconsin is a battleground state where his campaign is focusing on courting Black voters, young voters and any voters who might help him wrest the state’s 10 electoral votes from Mr. Trump.Though Mr. Trump was in court, the Republican National Committee released a statement criticizing Mr. Biden for making the trip and blaming Bidenomics for economic problems.“With staggering inflation and negative economic growth, Wisconsinites are feeling the brunt of Joe Biden’s failures,” the group’s chairman, Ronna McDaniel, said in a statement. “Try as he might, it’s too little, too late to impress workers and families who are living paycheck to paycheck thanks to Bidenomics.”Alan Rappeport More

High borrowing costs have increased the risks of more customers not being able to repay their credit card debt, which is among the costliest type of loans.Lenders are responding by strengthening their buffer against such risks. Capital One boosted its provisions for credit losses to $2.86 billion from $2.42 billion a year earlier.Last week, Discover Financial also reported lower profit due to higher bad loan provisions.Warren Buffett-backed Capital One also recorded a $289 million charge related to replenishing the Federal Deposit Insurance Corporation’s (FDIC) deposit insurance fund, which was drained of $16 billion after Silicon Valley Bank and Signature Bank (OTC:SBNY) failed last year.The results underscore the threat facing consumers in the coming months due to elevated interest rates. Though experts estimate the Federal Reserve to start cutting rates soon, the U.S. central bank has warned they may need to stay higher for longer.Capital One’s net interest income climbed 4% to $7.52 billion during the quarter.Its net income fell to $706 million, or $1.67 per share, for the three months ended Dec. 31, compared with $1.23 billion, or $3.03 per share, a year earlier.Rival American Express (NYSE:AXP), which caters to high-income customers, is scheduled to report its earnings on Friday. Like Capital One, AmEx is also backed by Buffett. More